Depreciation, Market Valuations, and Investment Theory
In this paper the theory of optimal replacement investment decisions is employed to interpret the problem of depreciation accounting and market valuation. An asset should be replaced when its net contribution to present worth from an additional (marginal) year of service no longer exceeds its external market value. Three concepts of depreciation are contained or involved in this investment decision rule: market value, capital recovery, and net contribution to present worth. Market value and capital recovery are commonly suggested "methods" of depreciation. Net contribution to present worth declines with asset age, and represents a concept of depreciation that generally may not coincide with market valuation in exchange. The existence of a market for a used asset is interpreted in terms of multiple uses (and marginal internal values) for an asset. Through exchange the asset is downgraded from one use to another until it is junked.
Volume (Year): 9 (1963)
Issue (Month): 4 (July)
|Contact details of provider:|| Postal: |
Web page: http://www.informs.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:9:y:1963:i:4:p:690-696. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.